A “meltdown” in technology stocks put the Nasdaq-100 index on the verge of exiting the bear market on Thursday.
12,727 rose 2.9% to trade at 12,880.98 on Thursday afternoon. A close of 12,815.21 or higher would represent a 20% gain from the Oct. 17 low close of 10,692.06, meeting the widely used criteria for exiting a bear market.
The broader Nasdaq Composite COMP,
up 2.2% to 12,083. It will break out of a bear market ending at 12,255.95 or higher.
Tech and other growth-oriented stocks took a beating in 2022 as the Federal Reserve aggressively raised interest rates in an effort to curb inflation. In the new year, they made a sharp comeback. The Fed raised interest rates by a widely expected quarter point on Wednesday, but stocks rose after Fed Chairman Jerome Powell’s remarks failed to convince investors that the central bank would not cut interest rates until the end of the year.
Facebook parent Meta Platforms Inc. META,
Thursday led the gains after reporting stronger-than-expected results and key stock buyback announcements. Revenue from Apple Inc. from AAPL,
Amazon.com Inc. AMZN,
and Google parent Alphabet Inc. GOOG,
were scheduled after the closing bell.
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Louis Navellier, founder of money management firm Navellier & Associates, called the rally a “classic market crash,” a term used to describe a sudden spike in asset prices often associated with herd-like behavior by investors.
Navelier says in his post that “the fear of missing out is likely to drive the huge amount of money in dispute.”
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Meanwhile, investors have been wary of declaring a bull market when the Nasdaq hits the threshold, given a history of head-scratching that has seen it quickly slide back into a bear market after breaking out. Indeed, the Nasdaq broke out of a bear market last August, only to drop to a new 2022 low in October.
While the tech rally was pulling out of the Dow Jones Industrial Average DJIA,
trailed the blue chip gauge by 172 points, or 0.6%, while the S&P 500 SPX,
increased by 1%.